2012/08/03 Bank Reform GA 1st steps v 5

2012/08/03 Bank Reform GA 1st steps v 5

You are currently viewing a revision titled "2012/08/03 Bank Reform GA 1st steps v 5", saved on August 13, 2012 at 2:18 pm by Economics Working Group

Title

2012/08/03 Bank Reform GA 1st steps v 5

Content

Primary Policy for Banking Reform (and related financial institutions) for GA v5
Context – see overleaf
1/ End Tax Havens/Secrecy Legislatures
No other reforms can be fully effective without this, because large chunks of the banks can be registered off-shore, generally co-ordinated from a web centred on the City of London (or on-shore within special arrangements e.g. Delaware, Luxembourg) so that legislation inside countries, where they actually do business and affect people, is not enforced.
The banks are both the largest users of tax havens and provide the means for all the other abusers to use them. The mostly tax-free trillions hidden away are a theft, from the peoples of both sovereign elected governments and those under dictatorships, by the rich - who fail to contribute fairly to the collective means of survival for which we all share a responsibility. They also render sovereign nations impotent to conduct an independent financial, fiscal and monetary policies which allows the self determination of the 99%.
How? Tactical and strategic combinations of pressure from Occupies internationally, national and regional legislation, international agreement, selective consumer boycotts (including government requisitions), support for pressure groups like the Tax Justice Network.
2/ Massively Shrink Bank Bonuses and excessive Executive Pay
The end of unjustified banker remuneration would also make their balance sheets more secure, less likely to need bail outs and able to do more socially useful lending.
It would discourage bankers from taking taxpayer-insured inappropriate risk. Housing in London would probably become more affordable.
How? ‘Move your money’ campaign(s). Minimally implementing A Haldane’s proposals for a metric to justify anything (then develop it). More legal blocking powers for shareholders & other stakeholders (account holders, creditors, employees [this gets big]- Haldane suggests they all have board level input,) & probably by financial regulators. General outreach & public protest & demonstration.
3/ Effective financial Regulation including a ban on unsafe Derivatives
Accountancy standards and regulations in banks are untrustworthy, obscure and inconsistent between jurisdictions. Accounting practices are so lax that it makes effective regulation impossible. Even a ratings agency may decline to give a rating to a bank on the grounds that the ‘financial instruments’ are too ‘opaque’ to understand.
‘Regulators’ like the International Accounting Standards Board are hostage to the institutions they regulate. Thousands of pages of alleged financial regulation and reform are already ‘in the pipeline’. These include the Vickers Report, due in place 2019, which the government is now softening up on (despite the LIBOR scandal), Basle 3 which demands higher levels of ostensibly safe capital back-up in proportion to what is lent and the Dodd Frank Act (US) which is passed but far from implemented while consultants (typically seconded from the financial/legal sector) write further screeds of documentation. It includes some restriction on derivative trading. IOSCO – International Organisation of Securities Commissions, also has responsibilities here. Other outfits e.g. the EBA = European Banking Authority, ECB European Central Bank, ESRB – European Systemic Risk Board, Mifid – Markets in financial instruments directive, and various national sovereign bodies all bear responsibilities.
The difficulty is that simplistic instant implementation of ‘safe banks’ policies would get banks clawing back loans from the most vulnerable and useful & making few new ones. Also all these outfits aren’t integrating well. None of this makes it impossible or less urgent; the main requirement is the will and international co-operation. Pressure from Occupies internationally can strengthen this. The risk of financiers’ personal financial loss & responsibility may simplify regulations.
Many financial derivatives are catastrophically unsafe and direct commercial (not financial) commodity derivatives should be traded on exchanges only or (for the less traded commodities) with comparable visibility and strict regulation so that an instrument is permitted only if a licensing authority is persuaded that it does not risk direct or indirect economic harm. (nb. the 13 point EWG agreed paper on regulation developed from Tom Lines & A Haldane discusses change in more detail.)
Context 3 Aug 12
At an earlier GA on banking the Economics Working Group raised some dozens of suggestions for banking reform. We were told to go back and set two or three initial priorities. From an initial shortlist of eleven items papers were written modified and debated – extensively, and voted on at the EWG and among members on-line.
The issues of banking reform are massive and often complex. Best ‘solutions’ in one area often depend on choices made in another and can vary over time. So many specifics are arguable. Most of the reforms on this sheet and the following 13 point paper deal with the short and medium term which we have to survive before more thoroughgoing transformations for the benefit of the 99% (at least) can be trialed and developed. More is coming.
The three starter list top priorities are given above, on the first side. The three items underlined are hardly controversial and if passed by the GA (incredibly only 1/ is yet official collective policy) will allow us to move forward with a coherent view.
The background given underneath the three underlined items can not be perfect. But ideological perfectionism has arguably hobbled our development and effectiveness and led to widespread disappointment among our potential supporters. If any of the positions turn out to be inadequate they will be changed.
What we urge on the GA is to agree these three initially and positively so that we can articulate more of what is in the pipeline. It would be futile to have basic suggestions incessantly referred back, and a make months of work pointless. Last year at an early Banking GA we seemed to pass 7 items but not at the level that made them policy. Confusing or indecisive?
So we look forward to suggestions for a third substantial Banking document (The 13 point one is ready for you.) and/or feedback on the amalgamated ‘Roadmap’ currently running at 16 pages and due early August.
Thanks
nb This got consensus at the GA outside Scotland Yard on Friday 3rd August 2012